Counterfeit Trade Report is a Wake-up Call for All Nations
For businesses and IP rights holders who are still ambivalent about channelling monetary resources towards the protection of a brand, the OECD’s 2019 report, Trade in Counterfeit Products and the UK Economy, will be a massive eye-opener.
The frightening numbers on counterfeit trade
The economic impact that fake goods have on the British economy cannot be dismissed lightly.
- The volume of counterfeit imports grew to £13.6 billion in 2016. This accounts for 3 percent of all British imports.
- ICT devices, such as mobile phones, batteries and electronic components, were the most valuable counterfeit imports, amounting to £2.5 billion over the period.
- Attire and footwear such as handbags, shoes and clothing, have the highest volume of imported fakes, accounting for 9.3 percent of the total. Toys and games come in a close second with an eight percent share of the illicit goods market, followed by perfumery and cosmetics with 4.2 percent.
- More than half of consumers who purchased illicit goods are aware that the products were fakes.
- The top three countries that infringe on the intellectual property rights of British rights holders are China, Hong Kong and Thailand.
Impact of Counterfeit Goods on Public Finance in the UK
The impact of counterfeit goods is not limited to just businesses and IP rights holders. The reduced revenue from sales of legitimate products has caused adverse impacts on the UK’s public finance.
- Consumers overpaid by £4.8 billion, i.e., paying retail prices for contraband products
- Loss of sales due to the presence of pirated products is estimated at £9.2 billion, which is equivalent to 2.7 percent of the combined sales of the retail and wholesale sectors.
- Loss of licensing income from UK rights holders amounted to £11 billion
- The drop in demand for original products due to the presence of counterfeit goods has reduced labour demand by 60,000. In addition, job losses due to the same reason amounted to over 27,000.
- Loss of tax revenues from legitimate sales is estimated at £4 billion.
These staggering statistics are just the tip of the iceberg – they do not factor in the economic impact on law enforcement and border control agencies. In addition, there are many other aspects related to counterfeiting operations, such as environmental and societal impacts, which cannot be quantified. In light of these data, companies and governments all over the world should really reassess their existing IP protection policies.